ANZ banking group

The Australia and New Zealand Banking Group (ANZ) on Friday posted record annual net profit of Aus$7.3 billion (US$6.5 billion) — up 15 percent — pursuing an Asia-focused growth strategy.

Cash profit, which strips out non-core items and is favoured by analysts, was up 10 percent to Aus$7.10 billion on last year.

The results for ANZ, one of Australia’s four major banks, were roughly in line with guidance and boosted by a 17 percent cut to bad debt provisions of Aus$989 million.

“This is another good performance that demonstrates consistent execution of our super regional strategy which is positioning ANZ well in a more constrained operating environment,” said chief executive Mike Smith.

“We made progress in all our key markets.”

The company’s Australian operations still generate well over half its profit and remain core, with Smith reporting that the domestic division “maintained momentum” with cash profit rising seven percent and revenue five percent.

New Zealand recorded 10 percent growth in cash profit but had revenue growth of only two percent.

ANZ’s lucrative international and institutional banking (IIB) unit performed strongly.

“The result also saw continued momentum from our international business in Asia Pacific, Europe and America which now accounts for 24 percent of group revenues,” Smith said.

“This provides ANZ with meaningful and differentiated growth options without the need to take on more risk.”

Cash profit from Asia increased 25 percent and revenue rose 10 percent. Revenue has grown strongly over the past five years with a compound annual growth rate of 23 percent.

“With the phase of high investment in Asia largely complete, we are seeing a greater share of Asia-led revenue growth translate to profit,” Smith said.

He noted however that “the macro drivers of growth in the sector are slowing and the environment is looking more challenging”.

“IIB has grown and diversified its earnings by geography, product and customer, and is becoming more resilient against changeable market conditions,” the bank added in a statement.